If you have some money automatically deducted from your paycheck and put into a 401(k), the value of your investments will go up during booms, but down during busts and recessions. Nobody would, I think, consider you to be a genius investor. But on Wall Street, if you make a lot of money during booms and then lose all your money and require a government bailout during a bust, that’s considered “no one could have predicted” territory and it’s very important to pay you millions of dollars lest your unique talents be lost.
Friday, March 20, 2009
I liked how Matt Yglesias summarized the thinking behind the current financial mess: